Monopoly Rents Research Articles

Tourism-induced land acquisition in protected areas: Land rent dynamics and state monopoly rent around the Wulingyuan world heritage site in China

Tension between nature conservation, green grabbing, land acquisition for tourism, and value grabbing highlight a significant yet understudied area: the underlying land rent mechanisms and the state's role in driving green land acquisition for tourism. Using Marxian land rent theory, we explored how ‘state monopoly rent’ is produced by tourism-induced green land acquisition and the consequent displacement and resettlement of communities in and around the Wulingyuan World Heritage. State actors actively acquired land and land use rights for tourism development to maximise the rent gap despite, and perhaps because of, national nature conservation priorities and restrictions. State actors are a key player in the political economy of tourism by directly capitalizing on potential land rent in China.

The Economic Role of Technology in International Trade: Theory and Practice in the Trade War

Scientific purpose. The aim of the article is to analyze the impact of technological changes and restrictions on the freedom of technology transfer in the contemporary world economy on international trade in the context of the trade conflict between the United States and China. Research process and methods. Interrelationships between the role of technological changes and trade, the issue of monopoly rent resulting from the technological advantage of some countries, were examined on the basis of the theory of international trade (Ricardian model, Heckscher-Ohlin) and subsequent theories, in particular the approach of Posner, Krugman, Melitz. To analyze the problem of technology transfer limitations in the modern world economy, mainly due to China's trade practices, a quantitative and qualitative method was used as well as a review of statistics of international trade in high-tech goods. Foreign direct investment in China was conditioned by the transfer of knowledge and advanced technologies from the United States. Scientific analysis results. Technological changes and the spread of technology as a result of the intensification of international trade are associated with a specific impact on the benefits and losses for the state with a technological advantage as a result of the phenomenon of "learning by doing". To examine the economic effects of the growing importance of technology in international trade, the theoretical and empirical approach to analyzing the demand in selected countries, including the United States, European Union countries, Japan and China, for the level of employment and wages of highly qualified labor force was used. Conclusions, innovations, recommendations. Further research should cover issues related to the influence of states on supporting the development of advanced technologies, which is associated with specific dilemmas regarding the shaping of international trade flows and the impact on the level of wages in the economy.

Ownership frictions in a procurement market: Evidence from London buses

This paper investigates the efficiency impact of garage ownership frictions in the procurement of public bus transportation services in London. In this market, operators are less competitive for routes far from their garages, leading to local monopoly rents. Empty bus travel between garages and routes (dead miles) is found to account for about 13 percent of driving time in this market. Consequentially, sizeable effects of dead mile minutes on bids and procurement costs are estimated. Taking the urban context and the demand side as given, and treating this market as a typical network industry, counterfactual simulations evaluate the effect of unbundling the ownership of bus garages from the operation of the bus routes. Letting a central dispatcher allocate buses to garages would reduce total dead miles by 14 percent, with corresponding reductions of operating costs and of polluting exhaust emissions.

Intellectual Property Rights, Global Inequalities, and Secular Stagnation

ABSTRACT Intellectual property rights have played an increasingly important role in the global economy since the 1994 TRIPS Agreement. The nature of this role has since come under the spotlights: do intellectual property rights foster innovation or rent seeking? Do they promote knowledge diffusion and development, or do they skew global competition in favor of Western economies? This article explores some of the most striking developments that recently occurred in the world economy, namely, the rise of inequalities and the emergence of the secular stagnation, in the light of the intellectual property rights debate. This article contends that income inequalities, both between and within countries, are partially driven by monopoly rents accumulated by a minority of large Western corporations (inequality between countries) and redistributed to a minority of employees (within countries). In both cases, the imbalance of profit and wage distribution may be contributing to global slow growth by depressing investments and consumption, ushering in an era of secular stagnation, thereby explaining some of the current trends in the global economy.

Foreign direct investment and domestic innovation: Roles of absorptive capacity, quality of regulations and property rights.

Foreign Direct Investment is theoretically expected to facilitate the transfer of knowledge from the home country to the host country, however, the empirical evidence on the subject is mixed. Some studies have shown that, on one hand, as competition grows, the incentive to innovate reduces with the decrease in monopoly rents (Schumpeterian effect). On the other hand, market competition can also boost investments in R&D activities incentivized by incremental profits (Escape-Competition effect). Therefore, this study aims to explore which of these two effects dominates in the selected group of countries. This study also identifies the moderators of the relationship between FDI stock and domestic innovation. It examines the role of absorptive capacity, quality of regulations, and property rights protection in the innovative activities of the host countries. Generalized Method of Moments is used to estimate the parameters of the multivariate regression equation. The analysis is based on panel data consisting of 49 countries over 14 years. The results show that FDI has a negative relationship with domestic innovation, indicating the presence of the Schumpeterian effect. The extensions of the main models show that FDI positively affects domestic innovation in countries with higher absorptive capacity, the superior quality of regulation, and stronger protection of property rights. This study shows that the positive relationship between FDI and domestic innovation is conditional on the ability to absorb knowledge and quality of governance in the recipient countries.

Landlord opposition to rent control and the politics of class monopoly rent

Housing costs have soared in the United States and beyond in recent years, leading to growing calls for rent control among tenant rights advocates and legislators. This push to enact rent control has been met with substantial opposition by landlord associations, an opposition which is mobilized by long-standing arguments by economists rooted in neo-classical economic principles. The article extends existing criticism of one particular facet of this opposition: the argument that rent control will only worsen any housing crisis as rents increase due to landlords actively reducing supply. We argue that this argument amounts to the pursuit of something that mainstream economists have long ignored or disavowed to counter-act the intended purpose of rent control: class monopoly rent. By drawing on evidence from the statewide rent control legislation passed in Oregon in 2019, we engage with scholarship on the sociology of housing markets and Marxian rent theory to reveal that landlords acting as a collective voice through landlord associations to advance this argument effectively constitutes the discursive deployment of class monopoly power as a political strategy to lobby against tenant rights proponents. As such, we argue that landlords effectively engage in a “politics of class monopoly rent” which functions as a discursive weapon against tenant rights activists and low-income renters otherwise held captive in unaffordable housing markets. We offer this article as a resource for tenant rights activists and legislators who must inevitably confront this opposition in the process of mobilizing rent control legislation.

Blocking patents, rent protection and economic growth

We develop a Schumpeterian growth model to analyze the interaction between patent policy and firms' internal strategies to capture value from innovations. We consider two dimensions of patent policy: backward protection against imitation and forward protection, also known as blocking patents, against subsequent innovation that builds on a patented technology. Incumbent patent holders endogenously invest resources to protect their monopoly rents by impeding market entry of innovative competitors. We show that patent policy impacts economic growth through its influence on both the ex ante R&D incentives of potential innovators and the post-innovation rent protection incentives of incumbent firms. Most importantly, our analysis formalizes a novel growth-promoting role of forward protection; by guaranteeing previous innovators a share of future innovators' profits, forward protection reduces the incentive to actively obstruct follow-on innovations. We identify conditions under which the selective use of forward protection can stimulate economic growth through this mechanism.

Marxist Rent Theory and Its Applications in Developing Countries

The conceptual tools of Marxist rent theory, such as absolute and monopoly rent, need clarification. The institution of landed property, alone, is not responsible for absolute rent. The Marxist theory of land rent continues to apply under two contemporary conditions: (1) the agrarian stagnation in developing countries such as India and (2) the urban rents and property prices. Most owner-cultivators in developing countries could be earning negative rents. Furthermore, differential rents and monopoly rents — fueled by speculation and state policies — explain movements in urban rent and property prices if the organic composition of capital is similar across sectors.

Land market concentration, developers’ pricing decisions, and class monopoly rent in urban China

Drawing on Harvey’s assertion on class monopoly rent, this paper investigates developers’ monopolist pricing decisions in urban China, with an additional focus on the heterogeneity between state-owned enterprises (SOEs) and private developers. By contextualizing Harvey to China’s urban political economy, we find that when developers maximize profits and local governments maximize land revenues, their individual activities forge a collective to create “island-like” markets that lead to class monopoly rents, and that local governments seek to realize social goals primarily through the operation of SOEs, making SOE developers act differently. We specify a set of hypotheses on the relationship between private developers’ monopolist pricing and their power in local secondary land markets and SOEs’ imparity. We organize a city-level, national-scale dataset and use a fixed effects model and the instrumental variable approach to test our hypotheses. This research has implications for China’s land and housing policies, and suggests that a deeper examination of the concept of class monopoly rent would facilitate a better understanding of contemporary neoliberal cities.

Land rent theory and rent research of digital platform enterprises

Marxist land rent theory has unveiled the nature and source of land rent, providing the rationale for discussing the distribution of total social products among wages, profits, and land rents. This paper has systematically summarized the development of Marxist land rent theory and its application in the field of digital platform research by constructing the mathematical-political economic model on this basis, we divide digital platform enterprises' revenues obtained into average profit, differential rent, and monopoly rent, and then discuss the source and impact of each part of the revenues respectively. Our study finds that: First, digital platform enterprises need to obtain average profit to compensate for the investment in providing digital space, products, and services, satisfying the fundamental requirement for an equal amount of capital to obtain an equal amount of profit. Second, on the premise of improving production efficiency, digital platform enterprises transfer surplus-profit from the general productive departments in the form of differential rent, whereas having no influence on the average profit of the general productive department. Third, digital platform enterprises can redistribute social revenues by collecting monopoly rent, and the excessive expansion of the scale of monopoly rent will inevitably squeeze the average profit of the general productive department, affecting the requirements of capital accumulation for reproduction on an extended scale and the proportional relationship between departments in social reproduction. Therefore, in order to guide the healthy development of digital platform enterprises, we should meticulously examine the role of digital platform enterprises from the change of overall social-economic efficiency, understand the nature of different types of rents, and evaluate the dynamic impact of digital platform enterprises' overall revenues on the change of the whole society's average profit rate.

Foreign direct investments and the dynamics of trade and capital flows: Schumpeterian insights for sustained development

AbstractThis article analyses the role of foreign direct investment (FDI) in trade and development theory and outlines the resulting implications for economic policy. We propose an alternative model of international trade and development based on absolute, not comparative advantages of firms, which are nested in countries but compete internationally. Applying a Schumpeterian theory of dynamic development, we consider how firms can either increase their competitiveness through productivity gains at a given wage level, or by combining the existing high level of productivity with lower wages in low‐income countries. We argue that the aim of competition policy must be to improve the quality of economic competition in international markets, limit monopoly rents and disincentivise rent‐seeking activities through the mere outsourcing of production. To that end, we propose that economic policy must reinstate rigorous wage bargaining regimes and make FDI subject to wage conditionality, obliging foreign companies to increase their wages in the host economy in line with average national productivity growth and the national inflation target.

Preventing bank panics: The role of the regulator's preferences

AbstractHow do the preferences of a banking authority affect its decision making in periods of distress and thus financial stability? We study this question in a version of Diamond and Dybvig (1983) with a monopolistic bank and a time‐consistent policy response by a banking authority. We show that limited commitment on the part of the banking authority may induce fragility but the banking authority's incentives are also an important determining factor in the degree of financial stability. In particular, under a simple suspension scheme, delegating a banking authority who places sufficient weight on a banker's welfare acts as a commitment device and prevents runs, in analogy with how a Rogoff (1985) “conservative” central banker helps reduce inflation bias. In contrast, once interventions take the form of payment rescheduling, the scope for the bank's susceptibility to a panic increases should the banking authority put more weight on monopoly rents. Identifying such an aspect of vulnerability suggests that appointing a banking authority whose objective function deviates from that of depositors may have unintended consequences.

FREEDOM, POVERTY, AND IMPACT REWARDS

AbstractA free world is one in which human beings can live free, self-directed lives. A great obstacle to such a world is severe poverty, still blighting the lives of half of humankind. We have the resources, technologies, and administrative capacities to eradicate severe poverty, but doing so requires some restructuring of existing social arrangements. We might begin with the current regime governing innovation, which has monopoly markups as its key funding source. Such monopoly rents encourage the quest for innovations, but also greatly impede their diffusion. This headwind harms the poor, who cannot afford monopoly prices and whose specific needs innovators thus tend to ignore. It also works against potential innovations whose benefits would mostly go to third parties whom buyers care little about. Both problems can be much alleviated through a supplementary alternative reward mechanism that would enable innovators to exchange their monopoly privileges on any patentable technology for impact rewards based on the social benefits achieved with it. By promoting innovations and their diffusion together, international impact funds would bring substantial gains in justice and cost-effectiveness, especially in the pharmaceutical and green-technology sectors.

URBAN NOSTALGIA, REGENERATION, AND CULTURAL MONOPOLY RENT: ‘Nanjing 1912’ and Its Branding Bubbles

AbstractNostalgia has become an important aspect of culture‐led urban regeneration in advanced cities. Chinese cities have also experienced this tendency because many local states have used nostalgia as an instrument to brand their cities and promote business opportunities. However, culture‐led regeneration has resulted in the dilemma of cultural commodification and branding bubbles, as this approach is subordinate to capital circulation and property revitalization. We translate the Marxist idea of monopoly rent proposed by David Harvey into culture‐led regeneration by focusing on the influence of urban nostalgia on the production of the built environment and place distinctiveness for capital accumulation. Against the background of national capital in the Republic of China and its current fervor for culture‐led regeneration in what is known as the ‘Republican style’, in this article we explore the case of Nanjing 1912 to examine how urban cultural monopoly rent is produced through the project, and scrutinize its dilemma of over‐replication. Although nostalgia is associated with culture, creativity and history, Nanjing 1912's regeneration is underpinned by economic revenue and by investors experiencing branding bubbles as they tried to upscale the 1912 brand to Nanjing and its neighboring cities.

LANDSCAPES ON HOLD: Opening up Monopoly Rent Gaps on Crete's Cape Sidero

AbstractTo explain the continuous hold of a single touristic real estate investor over the greater part of Crete's easternmost peninsula, Cape Sidero, for a period of over thirty years, this article examines the production of rent gaps on ‘exceptional’ rural land through increasing potential rent rather than a falling capitalized rent. I examine Neil Smith's ‘alternative’ rent gap hypothesis as it applies to two main factors: the production of and sustained control over land of monopolistic quality, which has no fixed value and is resistant to depreciation; and the dramatic neoliberal reworking of land markets through institutional and legislative changes, which produce legally ‘exceptional’ spaces. I employ the conceptual lens of the rent gap to examine how opening up a rent gap on ‘exceptional land’ based solely on the promise of (re)development can be a sufficient driver of land dispossession. Simply sustaining this promise can perpetuate land with monopolistic quality as a site of rent‐generating possibility, and while this process might never lead to (re)development, it can result in the submersion of the landscape into a captive, limbo state, stealing its future.

Avoiding Global Pandemic Injustice

Abstract COVID-19 has highlighted the failure of the current monopoly market system of pharmaceutical industries to efficiently and equitably distribute lifesaving health commodities in a pandemic. The pre-purchasing of COVID-19 vaccines in 2021 by high income countries (outside of the global coordinated effort called the COVAX facility) has led to inequitable access to vaccines globally. This may have contributed to the development of new COVID-19 variants of concern such as ‘Omicron’. Further, vaccine inequity has resulted in the poor suffering the worst health and economic outcomes of the pandemic. COVID-19 has deepened inequalities and increased global poverty. While high income countries are on a path to recovery with pre-pandemic growth rates forecast for 2022, low and middle income countries are still in economic recession, with growth rates forecast to remain at 5.5 percentage points below pre-pandemic levels by 2024. The Health Impact Fund approach offers an alternative, whereby pharmaceutical firms profit in proportion to their contribution to reducing the disease burden rather than through monopoly rents from product sales.

Business improvement districts, class turf war and the strategic weaponisation of class monopoly rent

Business improvement districts (BIDs) are understood as a proactive response by locally dependent property owners and businesses aimed at attracting capital investment and consumers back to the central city at a time of increasingly gutted public sector resources. BIDs have yet to be explicitly examined as a form of rent-seeking, even though the primary motivation for property owners to self-impose additional taxes for implementing ‘clean and safe’ programmes is rent. In this context, the self-imposed tax is treated as a speculative investment that will hopefully yield a return in the form of enhanced profit for businesses and rents for landowners. As such, we conceptualise BIDs as not only a form of rent-seeking, but an alliance of private-sector actors engaged in the collaborative and strategic mobilisation of class monopoly rent as a weapon against all perceived barriers to profitability. Based on evidence from Seattle, Washington, the paper deepens our understanding of BIDs by linking this phenomenon to the spatial dynamics of rent within the contemporary neoliberal city and concludes by discussing the implications for what BIDs reveal about class monopoly rent in particular, the kind of class conflict this form of rent configures and its role within wider processes of neoliberal urbanisation.

Class monopoly rent and the urban sustainability fix in Seattle's South Lake Union District

The paper contributes to the recent renaissance in Marxian land rent theory by examining the dynamics of rent in the context of contemporary urban sustainability policies and practices. It specifically examines the ways in which landowners, developers, and the local state work together to pursue class monopoly rent through a variety of policies and practices normally treated as separate, such as tax-increment financing, discursive-branding, urban growth boundaries, business improvement districts, and transfer of development rights. We implicate each of these practices as fundamentally linked insofar as they function as strategies for myriad invested actors in collaboratively pursuing class monopoly rent. In the process, we present a heuristic tool to conceptualize how these policies converge to the benefit of myriad rent seekers in the context of Seattle's rapidly redeveloping South Lake Union District. The study peels back the discursive and ostensibly progressive façade of urban sustainability to reveal a collaborative network of landowners, developers, and state actors whose goal is to increase rents. The multi-scalar dynamic of class monopoly rent is revealed as a constitutive feature of an urban sustainability fix embedded within wider processes of uneven neoliberal urbanization.

Who Killed the Phillips Curve? A Murder Mystery

Is the Phillips curve dead? If so, who killed it? Conventional wisdom has it that the sound monetary policy since the 1980s not only conquered the Great Inflation, but also buried the Phillips curve itself. This paper provides an alternative explanation: labor market policies that have eroded worker bargaining power might have been the source of the demise of the Phillips curve. We develop what we call the "Kaleckian Phillips curve", the slope of which is determined by the bargaining power of trade unions. We show that a nearly 90 percent reduction in inflation volatility is possible even without any changes in monetary policy when the economy transitions from equal shares of power between workers and firms to a new balance in which firms dominate. In addition, we show that the decline of trade union power reduces the share of monopoly rents appropriated by workers, and thus helps explain the secular decline of labor share, and the rise of profit share. We provide time series and cross sectional evidence.

Компанії-постачальники на енергетичному ринку України: конкуренція стратегій

Liberalization of Ukrainian energy markets provides end consumers with the possibility to deliberately choose an energy supplier. Consequently, companies selling natural gas and electric energy have entered into a stiff competition. Since the specifics of the product sold in these markets do not imply opportunities for its improvement, the emphasis in competitive strategies was placed on price and improvement of customer services. There is a competition of strategies in the market: a large number of suppliers are trying to create and maintain competitive advantages in various ways. The purpose of the study is to allocate the basic competitive strategies that supplier companies adhere to in the Ukrainian energy market, compare the efficiency of these strategies, as well as determine further prospects for their implementation. Depending on what advantages the suppliers are guided by, the following ones were allocated: predatory strategy (the desire to obtain a monopoly rent); resource strategy (the desire to obtain a Ricardian rent); intellectual leadership strategy (the desire to obtain a Schumpeterian rent); grid strategy (the desire to obtain the rent of relationship); imitation-parasitic strategy (the desire to obtain a fraudulent rent). In its pure form, these strategies do not exist, as a rule, a symbiosis of several strategies is used. Although market leaders are companies with resource strategies (heirs to former natural monopolists), they are confronting an eager pressure on the part of the energy suppliers, focused on Schumpeterian rent and rent of relationship. Since innovations are available to all energy traders in customer services, those companies that become intelligent leaders in business models and processes are likely to win the competition. Both the predatory and the imitation-parasitic strategies cause numerous negative consequences for all market participants – consumers, generation, independent suppliers, the regulator, therefore they meet with significant resistance from these groups. Consequently, the potential for their use is limited.